“The disgorgement remedies are now limited to five years,” Zaccaro said. This is as a result of the Kokesh vs. SEC case. Disgorgement refers to the act of giving up something (such as profits illegally obtained). Previously the time period was not specifically defined, and this meant that, if wrongdoing had been going on for decades, the sum to be paid back could be substantial. This is viewed as a blow to the powers of enforcement.

Another significant ruling handed down by the Supreme Court relates to the definition of whistleblower under the Dodd-Frank Act of 2010. He noted that the SEC “has awarded more than $158 million to whistleblowers since the inception of the program.” Plus, enforcement actions from the tips passed along “have resulted in more than $1 billion in financial remedies.” Whistleblower tips to the SEC are increasing.

In Digital Realty Trust Inc. v. Somers, the Supreme Court kept a narrow definition of “whistleblower.” “Someone won’t qualify as a whistleblower if they report via the company’s internal whistleblower program,” Zaccaro said. Whistleblowers are only protected against retaliation from employers if they report allegations of an employer’s securities law violations to the SEC. “Employers now know to get their people to report internally,” he said.

The Lucia vs. SEC ruling led to the invalidation of the appointments of SEC Administrative Law Judges, Zaccaro noted. “The SEC’s record against their own internally appointed judges was almost flawless,” he said, “rather like the Harlem Globetrotters.” The ruling may affect the appointments, and decisions, of many Administrative Judges.

The SEC created a Cyber Unit in 2017. “Are virtual coins and tokens actually securities?” Zaccaro asked. He referred the audience to the Howey Test, which determines whether a financial instrument qualifies as an “investment contract” under the Securities Act.

In terms of future decisions to come from the Supreme Court, Zaccaro pointed to the case of Lorenzo vs. SEC. In this case, Lorenzo, a director at a brokerage firm sent misleading emails to potential investors. Lorenzo argued that he could not be held responsible because he had just copy-pasted false statements. “This will be important for defining who makes a statement for fraud liability,” Zaccaro said.